Nvidia is winding down its Icera modem operation in the second quarter of fiscal 2016 and exiting the LTE business.

The news comes as no surpise to us. Nvidia quietly walked away from the smartphone business under similar conditions. The phone SoC market commoditised too fast for Nvidia to score seriously from it.

Nany Nvidia executives we met in first part of 2015 felt that Qualcomm was just too strong in the phone market and Nvidia could not fight the new commoditisation threat from the likes of MediaTek. MediaTek became the number two LTE supplier rather too fast leaving Nvidia with no breathing room.

Intel is still in the market and even though it has a nice LTE modem and decent SoCs for phones, and a lot more cash to spend than Nvidia they have not dented Qualcomm's rule .

Nvidia has told its investors

"it will wind down its Icera modem operations in the second quarter of fiscal 2016. The company is open to a sale of the technology or operations. "

Nvidia bought Icera in 2011 hoping to ride a smartphone wave. In 2011 you needed to have LTE to be taken seriously in the phone market, so Nvidia bought Icera. It paid $376M for the operation and its 500 employees. These chaps were primarily based in the UK and France. Now Nvidia is looking to sell of this business unit to the highest bidder as the LTE in-house adventure seems to be over.

Apparently the Icera 4G LTE modem meets the company's needs for the next year. Nvidia did not specify which Icera product it had in mind but the latest one is called Nvidia i500 and supports LTE Cat 3/Cat 4 100-150 Mbps DL (50 Mbps UL). This is not the greatest LTE / 4G gear. It does not help that the Icera 410 and i500 got certified for AT&T as the Tegra 4iTegra 4i failed meaning Nvidia had no phones for the gear. In 2015 as Nvidia didn't had any phone announcements and didn't buy a booth at the Mobile World Congress.

MediaTek is getting ready to support Cat 6 LTE this year while Qualcomm, as LTE supreme commander and market leader, whill use Cat 10 modems.

We still have to see how Tegra X1 does on the market but it has only been seen on the Nvidia console that is supposed to be released this month. This one can use i500 modem and in the future Nvidia can rely on third party modem manufacturers, especially for its car business.

Nvidia plans to share more details on the May 7th 2 pm PT (5 p.m. ET) financial conference call. Apparently the company plans to discuss its financial results for the first quarter of fiscal year 2016, ending April 26. 2015.

Nvidia got a decent design win, at least when it comes to its modem business. Its first big winner is no other than Microsoft with Surface 2 64GB for AT&T. This is the official name of the product that just became directly from Microsoft.

This 64GB, Tegra 4 powered tablet comes with an Icera 500 Nvidia modem that is capable of 4G on AT&T's network and in the rest of the world should work as a 3G solution. This is at least possible in case that your carrier frequencies are supported. The chances that they are supported are good.

The $130 premium is the same amount Apple charges for its LTE iPads and of course you will have to setup AT&T data account in order to use the modem. Other than the added LTE support, there is not much that sets it apart from 64GB non-LTE version. The 4G LTE version is late to the party, but Windows RT lovers that enjoy the fact that their ARM-based processor can run free Outlook can now enjoy 4G as well.

This is a significant and first major design win for Nvidia's Icera 500 modem but we don’t think that either of these two partners will sell millions of units. It is just a nice proof of concept that both companies can offer 4G LTE product in their portfolio. Let's hope that there will be more of this LTE as from where we stand, Qualcomm wireless LTE business needs some serious competition as it completely rules the USA and rest of the world.

The tradition continues. Our sources are confirming that Nvidia’s Logan SoC, possibly called Tegra 5, doesn’t come with an integrated LTE modem. Just like Apple, Nvidia makes a big fast chip with impressive Kepler based GPU, but it won't put a an icera LTE solution inside the same chip.

Icera i500 is Tegra 5 compatible and it has AT&T certification. As the launch draws near, it should become compatible with other US and international LTE carriers like Verizon and T-mobile.

This should not be a big issue for Nvidia’s target market, manufacturers will have to choose two chips instead of one, a clear competitive disadvantage compared to future Qualcomm chips with Adreno 400 graphics and updated CPU cores, expected in early 2014.

During Nvidia’s recent conference call, CEO Jen Hsun Huang said devices based on the new Tegra 4i with integrated LTE should be announced in Q1 and ship no later than Q2. Jensen also mentioned that people are going to be "delighted by the OEM that it comes from" which is probably his way of of announcing some big brand design wins, but he also emphasised that the designs will be global rather than US. For US success you need CDMA Jensen said, but as far as we know Verizon is the only company using it.

Since Apple can pull of two chip designs from day one, we can only assume that two chip approach won't cost much battery life compared to single chip design that has LTE on board (Snapdragon 600 and 800 ed. ). However, Nvidia is likely going to be making bets on its Kepler based GPU, expected to be the fastest graphics core ever integrated in a mobile SoC that will rock tablets and some phones around the world. The fact that Logan is likely to pack very powerful graphics sans on-die LTE makes it a bit more interesting for tablets than phones, which is exactly what we saw with the Tegra 4.

We expect to see Tegra 5 devices announced at CES 2014 so early January and with some luck we might see them shipping very early in 2014.

One of the tougher aspects of handheld chip design is to get the certification for US network carriers such as AT&T and Verizon.

Despite the fact that Nvidia showed Tegra 4i back in February it just recently got the AT&T certification and validation of its LTE modem. Qualcomm is already certified for Advanced LTE and theoretical speeds of 150 Mbits per second and Nvidia should be ready for Advanced LTE too.

Nvidia's i500 icera modem also got certification for AT&T and this was confirmed by Jensen Huang Nvidia CEO during the company’s last earnings call. The way things are moving we should see devices based on Nvidia icera i500 modems and Tegra 4i showcased and announced already at CES 2014 as traditional US carriers chose to show these new devices at CES. At the Barcelona based Mobile World Congress in late February we expect to see European and international design wins based on mainstream Tegra 4i, icera i500 and Tegra 5 as well.

Tegra 5, currently codenamed Logan, from what we know comes in January with designs to happen in Q1 2014. We don’t know if Nvidia can get Verizon certification anytime soon as if Nvidia had it by now, they would surely be bragging about it.

Nvidia just showed the external LTE part of Tegra 4 and it calls it the i500 Soft Modem. This is the new LTE 4G programmable chip that is roughly 40 percent smaller than conventional LTE chips. It has 8 processors that can calculate 1.2 trillion operations per second and apparently, or according to Nvidia, does a pretty good job for a 4G modem.

It is sampling now and it should be capable of supporting multiple bands due to its programmability.

Asus will use Nvidia’s Tegra processors and Icera LTE chips in its upcoming Windows RT tablet, the Wall Street Journal is reporting.

Asus already tapped Nvidia for its MeMO-370T tablet, which we now know as the Nexus 7, so the decision is hardly surprising. However, the use of Nvidia’s LTE alongside the Tegra 3 could be a sign of things to come.

Nvidia product manager Mark Aevermann said LTE and WiFi versions of the tablet are in the works and it will be one of the first, if not the first, device to use Nvidia’s LTE chips. He added that the 10-inch tablet, codenamed “tablet 600,” will boast battery life in excess of 10 hours.

However, although Nvidia managed to get its hands on Icera tech and didn’t waste time shipping the resulting LTE chips, its Tegra processor still lack integrated LTE and this won’t change at least until the next generation shows up next year.

Nvidia still has money in the bank and it did a lot of good things when it comes to transforming and adapting to the industry. Who could have expected that Google can be so late with Android 3.0 and all other future releases and that there will be so little applications.

Still, acquiring portal player back in 2007 earned Nvidia quite a good position in ARM CPU market, but this market still has to grow with the rest of the non-Apple tablet industry. This is something that is yet to happen, but it might work beyond the hype.

Nvidia has recently acquired Icera soft modem chipsets that can end up in many phones and tablets. Nvidia expects to have its first design wins with Icera LTE modems as soon as Q1 2012, which is what Jensen confirmed at the last company conference call. He said that these modems, particularly Espresso 450 HSPA+, have been tested, approved, and should be shipping with tablets early next year.

The real goal how to make money is integration of this technology in its mobile CPUs and we should see an ARM core with integrated Icera modem. The aim is to get into lower end Smartphone markets, which love all integrated CPU and modem solutions, seeing as how they can save manufacturers a few bucks per design.

This chip should be heavily integrated and it should arrive at some point in 2012. Jensen reminded us that smartphone market should grow to a billion phones in 2015 and it would be good to capture a good chunk of that. Qualcomm is the company that Nvidia wants to attack with this all-integrated chip.

Android is another story as there are so many different resolutions and screens, formats, and things are not so easy. Ice cream sandwich might make things a bit easier for the developers. So after January 2012, things might start to turn for the better for Android based tablets.

Google can be happy that Microsoft, HP’s now defunct Palm OS, or RIM’s Blackberry OS for Playbook are not doing particularly good job fighting Apple’s iOS for iPad.

In case you were not certain about Nvidia's future plans for the next few years, after this acquisition, it all becomes quite clear.

Nvidia just announced that it has acquired Icera, a UK company that most of you never heard, which is apparently a leader in basedband and RF technology. According to Nvidia, this is the biggest acquisition ever and Nvidia hopes to be a bit more competitive to Qualcomm, the market leader in this area. Icera has 550 patents and a “top-performing baseband processors for 3G and 4G cellular phones and tablets.”

Nvidia will offer Tegra processors with its own baseband processors and it hopes to get more market share, and obviously more money. The market for baseband processors is worth estimated $15 billion a year and Nvidia wants a piece of that. It becomes very clear that Tegra is Nvidia’s commitment but at this time the most money still comes from graphics, especially from top performing Quadro market that is at the same Nvidia’s safety net.

Let's see how much actual money can Nvidia make out of this acquisition, but in the long term it looks like a good move for them.